Japan's prime minister has offered a "heartfelt apology" for his country's occupation of the Korean peninsula, but indicated that Tokyo was not willing to discuss any claims for compensation.

In a statement that closely mirrored previous apologies to Asian victims of Japanese wartime aggression given by former prime ministers Tomiichi Murayama and Junichiro Koizumi, Naoto Kan acknowledged the suffering caused in the 1910-45 occupation

"It is easy for the side that inflicted the pain to forget, while those who suffered that pain cannot easily forget," he said in a statement ahead of the 100th anniversary of the start of colonial rule, on 29 August.

"I express a renewed feeling of deep remorse and state my heartfelt apology for the tremendous damage and suffering caused by colonial rule."

The apology is being seen as an attempt to strengthen ties with South Korea, which have improved amid shared concerns over North Korea's nuclear weapons programme and its torpedo attack on a South Korean warship in March.

Better political ties have been matched by co-ordinated policy during the global financial crisis and strong economic links: South Korea was Japan's third-largest export market in 2009.

A Japanese government spokesman said Kan's statement was not directed at North Korea, even though Japan had occupied the entire peninsula.

Kan's remarks differed slightly from the groundbreaking 1995 statement by Murayama – repeated by Koizumi a decade later – as it was directed exclusively at South Korea and recognised for the first time that the peninsula was annexed "against the will of the Korean people".

Kan, who spoke to his South Korean counterpart, Lee Myung-bak, by telephone, said Japan would return a number of cultural relics, including documents describing court ceremonies during the Chosun dynasty [1392-1910], seized by Japan in 1922.

South Korea welcomed Kan's apology.

"We expect all Japanese people to share this view," said Kim Young-sun, a South Korean foreign ministry spokesman. "We hope that through proper recognition and reflection of the unfortunate history, close bilateral relations can further develop into a partnership for the future."

Conservative politicians in Japan, including members of Kan's Democratic party, had warned an apology would fuel demands for compensation. Japan insists all compensation claims were dropped when the countries signed a peace treaty and normalised diplomatic ties in 1965.

Despite the recent detente, the countries have failed to resolve several long-running disputes. Japan refuses to pay compensation to South Korean women who were forced into prostitution by the Japanese military, before and during the war.

Campaigners calling for reparations from Japan over its wartime conduct said the apology did not go far enough.

"Kan says Japan apologises and repent, but they are just words," said Kang Joo-hye, a member of a group representing former sex slaves. "He didn't mention the victims once, or pledge any action to heal their hurt or pain."

In another move that reflects the recent improvement in ties, no Japanese ministers will visit Yasukuni – a shrine to Japan's war dead, including class-A war criminals – on 15 August, the 65th anniversary of the end of the Pacific war.